When you agreed (if you agreed) to become someone’s executor, I don’t know if everyone is really ready for the work that’s required of you.  If you have some money, there’s usually a trust company who will happily charge you a fee to help you through the process.  If the estate is large or complicated, I recommend looking at these services because as executor you have now taken on legal responsibility to ensure the will is executed and not to scare anyone, if it’s found that not everything has been done properly the estate and government CAN (not would) legally seek compensation.

The Ontario government has a pretty good website to help you to deal with the situation:  http://www.ontario.ca/government/what-do-when-someone-dies

So first you need to determine if the person has died intestate which is the legal term for someone who died without a will.  If that’s the case the government will seek out an executor (most likely a close relative) and ask them if they want to be executor and if the answer is yes, the estate will be disposed of and distributed according to a government formula.  Usually it works like this (I have listed Ontario law, but most other provinces follow something similar):

  • If have spouse and no children  (issue – don’t have to be legitimate) – everything to spouse
  • If spouse and issue  AND estate less than 200K – everything to spouse
  • If spouse and  One issue AND estate greater than 200K – first 200K to spouse and remainder 50/50 to spouse and issue
  • If spouse and multiple issues AND estate greater than 200K – first 200K to spouse remainder 2/3 equally divided among children and 1/3 to spouse
  • No spouse and no issue – parents first and if no parents then equal among siblings  and if no siblings then nieces and nephews and if no close relative then next of Kin and there’s a whole table to see who’s down the line.

The government will be happy to deal with the estate for you (for a fee with set rates).

Say you are an executor for someone who died testate (have a will) then you as the legal representative is there to ensure the will gets executed the way the deceased intended.

But before you get happy handing out money, you need to ensure the following are done:

  1. Get a death certificate  and the will (originals) – this will be your ID as you act as executor.
  2.  Determine if the estate needs to be probated.  The probate will affirm your position as an executor but it is not legally required and often it’s avoided to save some money.  In Ontario the probate fee is approx 1.5%.  General rule of thumb is that if the estate is simple (cash, RRSP) and the amount are small, usually around 50-100K you maybe able to get away with out filing probate.  If that’s not the case then probate will be required before you will be able to sell property or take money out of bank accounts etc from financial institutions.  If probate is required you will have to head to court and fill appropriate paperwork and pay the fee.  Again fee structure vari province to province so look up your local rules.

Here’s what you and your trustee of your will need to know will happen to your RRSP when you die.

On the date of your death, your RRSP would have be considered redeemed – cashed out.  There will be no tax withholding (NOT SAME as no tax payable)  and the funds will be given to your beneficiaries on file according to the percentages designated.  Therefore it is important that your beneficiaries are up-to-date.  If there is no beneficiary designated then the money goes to your estate and distributed according to your will or regulations as it may apply.

As noted this does not mean that you don’t have tax payable issue.  Your estate will be liable to pay what ever tax redeeming your whole RRSP all at once unless your have designated a spouse or disabled dependent as your beneficiary.   Since this is considered a lump-sum redemption of your RRSP, your income for the year of your death has now just increased by the amount of your RRSP.  If you have a small RRSP, then it may not have a great deal of impact, but if you have saved more then it may push you to higher tax brackets and your estate will have a higher tax bill.

Also note that it is your estate that will be responsible for the tax bill and not the beneficiaries.  There is no tax withholding for disbursement on death and beneficiaries will receive full proceeds, leaving your estate to cover the tax payment.   For example if you have $100,000 in your RSP and you have designated each of your child as 50% beneficiaries, they each will receive $50,000 and your estate is liable for for $25,000 in tax payable to CRA (assuming your average tax rate is at 25% and you have no other income).  That money has to come from some where else in your estate.

This difference in tax treatment is the reason why I recommend that clients always designate their spouse/disabled dependent as the beneficiary, unless there are very good reason not to.  And if you are not going to designate your spouse/disabled dependent, then designate your estate as the beneficiary so that it can pay the taxes out of the proceeds before distributing the funds to your heirs unless you have funds set aside for any tax liabilities.

If you have a spouse/disabled dependent and have designated them as the beneficiary, then they can perform a tax neutral roll over of the assets that was in your RRSP to their own RRSP/RDSP.  They will have to report it as income (line 129) but they will receive an equal off-setting amount on line 232 leading to a tax neutral situation.   You can also achieve the same result if no beneficiary is listed and the spouse and the estate representative can elect to roll over the RRSP to the surviving spouse’ s RSP.  The process is longer but result will be the same.  Of course if there are named beneficiary, this will not be an option and the funds will be paid to the beneficiary.

Nota Bene: From the time death and when RRSP are transfered into the right beneficiary’s account or redeemed,  there may be a delay of several weeks or months or years.  Income earned after the date of  death is taxable in the hand of the beneficiary.

As the ‘baby boomers’ rapidly approach the magical age of 65, more and more questions are being asked about retirement income.  For most people their retirement income will be made up a combination of government programs and pension plans.  For those who have worked most of their lives, the income stream is made up of a combination of CPP, pension, RRSP and depending on income level from all these OAS (old age security).

For those who haven’t worked or haven’t worked much the situation is a bit different.  You may not have worked much because you have been a stay-at-home mom or situation in life has prevented you from working all of your life; regardless the reason here’s options that’s available to you.

1. CPP – As a paid into program, how much you receive will depend on how much you contributed to the program.  In most cases if you have worked a little bit you will be entitled to some CPP (Canada Pension Plan). Normally CPP sends out estimates before retirement age, so please do review their documents to ensure that they are accurate.  For those who worked but may have taken a break in working to raise your children you maybe able to have up to 7 years credited to your work time and thus increasing what your CPP payments.  See Child-Rearing Provision webpage for more details.  You will have to fill out some forms to have this added.

If you have not received any estimates as you approach 65 (actually you can do this at any time and if you are moving out of the Canada to work, I suggest you get this before you leave) you can request a copy of your contribution statement on-line, via mail.

2. OAS (Old Age Security) Pension – is a program to provide income supplement is available to anyone who has lived in Canada.  Because it is part of the general revenue, no contribution is required.  However, there’s a residency proviso.  The program is the largest pension program offered by the government and you may even be entitled to the program even if you don’t live in Canada (US residents!)  In this post will assume that you currently lives in Canada.  To qualify for the program you must be:

  • 65 and over
  • Canadian Citizen or legal resident
  • lived for more than 10 years in Canada after age of 18

You can apply after 64, but the government may auto enroll you.

How much you will receive will depend on how long you have lived in Canada.  If you have lived in Canada for 40 years after the age of 18 you will be entitled to the maximum amount as long as claw-back does not occur.  The current maximums can be found at Service Canada website.   It’ is $6618.48 per year, hardly enough to live on.

OAS Claw Back – OAS is available to everyone, but for those who have pension plans and other retirement income stream there’s a claw back clause for those who have sufficient private income stream that it is deemed that they don’t need government support.  While I have heard a lot of clients complaints about claw back from client, it is important to recognize that the claw back doesn’t happen until you have more than (in 2013) $70,954 in private retirement income.  I think what irks people is that they give it to you and then take it away.   To minimize OAS claw back, it is important to income split between spouses especially if one is receiving a good pension and one is not, but that’s another topic and post entirely.

GIS (Guaranteed Income Supplement) – Because the government recognizes  that $6618.48 isn’t enough to retire on, for those Canadians who does not have any other additional source of income, they have a separate program called GIS for those who makes less than $16, 728 (2013).  You can be entitled to this program at age 60 if your spouse is 65 and collecting OAS and GIS.  For single people the eligibility starts at age 65 when you are eligible for OAS.  You will have to apply for this program. However, once you applied, you don’t have to re-apply but will be required to file taxes every year.  This program for singles has maximum pay out of $8974.32.  The actual amount you will receive will depend on how much income from all sources you have.  Check out this webpage (scroll down half way) to get the table or download the pdf.

So the government will essentially ensure you have about $16,000 of income to live on.  While it’s better than nothing, it isn’t designed for you to live well.  If you live in a low housing cost area, this amount might be barely sufficient to offer a none destitute life.

For those of you who are in need of all of these program, I would highly recommend setting up a meeting with your local Service Canada representative who can walk you through all of the programs and help you apply for them before you turn 65 so that your entitled payments will start once you turn 65.

As always, please let me know if this post is helpful and if there’s other topics you would like to have covered.

This is one of the best defence of Defined Benefit Plans I have seen for a while… but given the current trend, these won’t be around that long

I understand why DPP are not popular with companies, it shows up on their books as liabilities and it can keep growing as their employees live longer, but it is by far the best type of pension to have.

There’s lots of pundits that think that Defined Contribution Plans are just as good, but the problems is that the only way to make really good returns (average investor’s return is 3% after inflation) is to own companies, which individual investors just can’t do.  Defined Pension Plan usually have a pension board who has the money to buy companies.  In Canada, the Teacher’s pension plan is one of the largest owner of commercial real estate, they even owned the Maple Leafs for a while.  

Maybe the solution is a new type of pension plan where it’s defined contribution, but managed by a fund manager like it’s currently managed so that the money can be pooled, something like TIAA-CREF.  This way there’s no liability for companies and the funds management is out of individual hands who in general is terrible at managing money. 

All members of the Canadian forces who are enrolled before Mar 1, 2012 are facing a impending decision on what to do with their payment in lieu of Canadian Forces Severance Pay (CFSP).  For some it will mean several hundred dollars, for others who have been around a while, it could mean up to over $20,000.

All member should have by now received a letter indicating what their eligible time period is and will have to make a decision on which of the following three options they will be picking between 14 Dec 2012 – 13 Mar 2013.

The choices are :

1. Take the cash now;

2. Take part of the cash now and part of it when you release from the forces; or

3. Take the full amount  when you release.

From the “water cooler” talk most people seem will be picking the “cash now” option.   However, I don’t get the sense that this decision is made with any detailed analysis and that it’s taken because it seems to be the common sense thing to do.

Well being a member of the forces and also a Certified Financial Planner, such hand-wavy approach to money matters will never do.  So I ran some scenarios to see if the accepted wisdom is indeed the right approach.

My conclusion are:

If you are not a Pte, and intent to contribute the funds to your RRSP, then it make sense to take the cash out option.  Otherwise, waiting is a better choice.

Now to to reach the conclusions I made the following assumptions:

1.  I assumed that you will have normal career progression as per pay band – if you are planning to commission, the result maybe different.  You can test that easily by doing your individual analysis.  Email me if you want the spreadsheet that will allow you to do that easily.

2.  I have ignored the effects of inflation because I assume that our pay will increase somewhat in step with inflation and using real returns I made this a non-factor.

If you want to look at the spreadsheet feel free.

Hope this helps you make your decision.

Over the last few weeks, it seems every article I read is about taxes.  There are articles discussing the merits of the Paul Ryan tax plan; there are articles about President Obama’s Buffet rule tax plan and of course there are the articles about the tax rates of both Mr. Romney and President Obama.

The issue I have with all these discussions about taxes and tax rates is that they never tell you if they are talking about marginal or effective tax rate.  Why does it matter?  It matters because using one versus the other can lead to very different conclusions about what is a reasonable tax rate and how much someone pays at the end of the day. There is a lot of loose talk about marginal tax rates and average tax rates (also called effective tax rates).   The intermingled and often incorrect usage of these two different rates is distorting the numbers bantered about in the tax debate and confusing the whole discussion.

So what is the difference?

  • Your marginal tax rate is the rate of tax you pay on each additional dollar of income you earn.  In most news stories this is the tax rate being discussed  because it requires no calculation.  The top marginal tax rate for federal taxes in 2012 is 35%. So if that is your marginal tax rate and you get a $100 dollar raise, you will pay 35 dollars more in tax than before.
  • Your effective or average tax rate is the rate of tax you actually pay on your whole income.  It is affected by the different brackets of income you have earned and needs to be calculated (see below). The discussion of how much taxes Mr. Romney and President Obama pay is all about their effective tax rate — the rate of tax they actually pay.

Now how can these two different rate distort the tax debate?  Let’s look at an example.

Let’s say you are single and you make $50,000 from a salaried job with no investment income and no deductions; then your marginal federal tax rate is 15%. This means you pay 15% on ‘the next dollar’ after $50,000 and every dollar thereafter.  You will then add your state tax of say 9% and payroll taxes (social security and medicare) of 7.65% (temporarily reduced to 5.56% for 2011 and 2012).  Now, you might think that your effective tax rate is around 32% (15+9+7.65=31.65%). This is wrong but this is exactly the way that the media, clients and writers of comments on news article often talk about taxes. I think this is the basis for a lot of the idea that taxes are too high.

Now, lets look at the actual effective tax rate of our hypothetical tax payer. If we assume for simplicity that you have no deductions, at an income level of $50,000 then your effective federal tax rate is actually 8.96%.  How is that you ask? First, everyone gets the standard deduction and personal exemption which totals to $9,500.  This is an amount you don’t pay taxes on at all.  This means your taxable income is really only $40,500. Next, because the tax code is progressive you actually pay a 10% marginal rate on income under $17,400. You only pay the 15% marginal rate on income above $17,401.  Therefore, once you average all of this out, your effective rate of federal tax is lower than the 15% marginal rate, just 8.96%.

You can use a calculator such as this take-home-pay calculator from calculator.net to find out what your total effective tax rate from earned income will be before deductions including state and payroll taxes. I ran the same state rate as in my marginal tax rate calculations and the effective overall tax rate is 24% (23.6%)  and not 32% derived from using only marginal rate figures.

So without doing anything different in income or rates I have shaved 8% off “your tax.”  This is why it is important to know when people are quoting tax rates which one they are using.  It’s the same reason there are laws to require discussions about interest rates to be done in APR. There are many other ways to discuss interest, but to allow consumers fair comparison among lenders they need to be using the same calculations so you can be sure you are comparing apples to apples.

To allow a fair discussion about tax policy and fairness we all need to be using the same numbers.

So what should you do with your RRSP if you leave Canada? The simple answer is you can keep your RRSP as is.  However, if you want to access the funds in the future there will be a 25% tax withholding, this amount is considered your tax paid. If you are happy with this you don’t need to do anything further.

If you believe your tax payable should be less than 25%, you can elect to file Canadian taxes and the difference would be refunded.  Keep in mind that for RRSPs the amount you redeem is considered income for that year, which means unless you have a small RRSP and no other sources of income, your income tax payable for the amount is not likely to be less than 25% .  You may also need to report the amount redeemed as part of your income in your new country as per that country’s income declaration requirements.

If you are certain ahead of time that your income tax payable would be less than 25% you can fill out Form NR5, Application by a Non-Resident of Canada for a Reduction in the Amount of Non-Resident Tax Required to be Withheld. This will reduce your withholding before the redemption even occurs.  This process isn’t any easier than filling out taxes, but it only needs to be done every 5 years so it will save you needing to fill out taxes each year if you are doing multiple redemptions.

Another option is to convert your RRSP to a Registered Retirement Income Fund (RRIF) and receive regular payments from the accounts.  The same minimum withdrawal requirements apply for RRIFs as they do with RRSPs and the 25% withholding tax also applies to all payments (unless your country of residence has specific tax treaties).  A reduced tax withholding amount of 15% is possible for US-Canada. This reduction applies if the payment is less than the greater of 10% of fair market value or twice the minimum withdrawal requirement (amount of withdrawal < greater [10% of FMV, 2x RRIF minimum withdrawal]).  A preferential NOTA BENE rate can be acquired but only if redemption is scheduled for regular periods.

As an example, suppose you have a $100,000 RRSP (as of December 31, fair market value) which has now been converted to a RRIF, you are currently 65 years and you want to make withdrawals.

The minimum required for RRIF withdrawal for the year is 4% or $4000.  You would like to withdraw $12,000 a year or $1000/mon.

Under standard non-resident rules you will receive $750/mon with 25% tax withheld.

If you are in the US, to get the reduced rate: 10% of FMV is $10,000  and twice the minimum withdrawal is $8000. The greater of the two is $10,000.  This means the first $10,000 of redemption is tax withheld at 15% and the excess amount is tax withheld at 25%

So for our example, the first 10 months you will received $850/mon and the last two months  you will receive $750/mon.

If you are in the UK such periodic payments should not be subject to any withholding.

If you are thinking of withdrawing from your RRSP I would strongly suggest you research your own country’s tax treaty and discuss it with your institution before proceeding.  They may still want to withhold 25% and let you deal with CRA to claim any amount that was taken in excess.

Of course, you always need to remember that the amount you take in as income may be subject to taxes in your new tax jurisdiction and will need to be reported as per their tax rules.

You may be able to transfer the amount into registered retirement plans, i.e. 401K etc.   The reverse can be done regularly by any large financial institutions in Canada, but I generally find Canadians financial services personnel have more experience dealing with moving money to US than US financial services personnel have in transferring money to Canada.

So in summary – file an NR5 if you really think your tax rates will be less than 25% and see what number they will come up with. Know your tax treaties and use any tax treaty rules in your favour as able, but be prepared to work with your Canadian institution and educate them as required.

I watched a bit a marathon of “Say Yes To The Dress” from TLC last week.

As a financial planner, my first reaction to the show was wanting to scream “DON’T WATCH THE SHOW!” as it will skew your perception of how much a wedding dress should cost.  I don’t think I saw a budget less than $3000!  And all for what?  One day of make believe and grand delusions?  Ask yourself, do you remember what dress the brides wore at a wedding you have attended 2 years ago?

To be fair, the whole show is not completely without merit.  After a few episodes I started to see how the process of choosing ‘the right’ dress can be a metaphor for making any emotionally charged financial decision.  I see many of the same pitfalls arise every day as a financial planner.  There were :

  • those who want everything but aren’t willing to pay the price
  • those who are looking for the ‘perfect’ dress and so afraid that they will regret their decision that they don’t make any decisions at all
  • those who love everything and can’t decide

The show is set in Klinefield’s, a ‘mass affluent’ bridal store in New York.  In one episode Randy, the fashion consultant, told us his cardinal rules about wedding dress shopping which I think are rules we can follow anytime we are making other large dollar, emotionally charged financial planning decisions in our life:

1. Don’t try on a dress outside of your budget, it will only lead to tears – isn’t that so true?  Our wants will always outpace our needs.  Even in the dream factory that is Klinefield’s the first rule is not to temp yourself.  Life would always be easier if you had more money, but if you don’t have it then why tempt yourself? This is where understanding how much money you have and can spend will keep you grounded.  As I’ve said before, you need to be realistic…and Think Poor. Live in the bliss of ignorance.

2. Don’t keep secrets from your consultant –  Yes, they want to sell you something, but they also want you to be happy, even if for no other reason that you will come back they can sell you something else.  Just remember the advice you get is only as good as the information you provide.  If you tell me you have no debt and want to retire at 65, my advice to you will be very different than if you have lots of debt and you want to retire at 55.  So don’t waste your time and the time of your advisor if you are not going to help them to be successful in helping you.

3. Leave the entourage at home – Don’t be surprised if everyone has a different opinion of how to achieve financial success; too much advice is not necessarily a good thing.  Reading all of the financial blogs and books isn’t necessarily going to help you (except this one of course). It may sound cheesy, but a better way to spend your time is to get to know yourself and what your goals are.  There is always a financial solution out there to get to your goals…just as there is always a dress out there for you. The trick is finding the dress or the financial plan that you can afford and that you can live with.

4. Stop shopping once you found the dress – The fundamentals of financial planning are actually pretty simple and universal.  You will need a tailored plan to suit your needs, but once you have plan, stick with it.  Stop trying to find the ‘better’ plan.  Changing course and second guessing yourself won’t help you and will only cost you more money if you make rash corrections to your plan over the short term.

5. Always wear underwear – Well that goes without saying… you never want to be naked at Klinefield’s or in your finances.  Make sure you always have a rainy day fund that is separate from your other accounts.

I would add one more cardinal rule:

6. Keep some perspective on what is really important – In many ways the rush and excitement of the wedding dress purchase is like the initial stages of your financial planning. Wrapped up in each stock purchase or mutual fund selection are all the hopes and dreams of your whole life, career, family and retirement. The wedding dress encapsulates everything brides dream about their marriage. But the dress itself is for just one moment in time.  It’s a lot of work and done right it can be the foundation of something wonderful but it isn’t the marriage. Try to think of your financial planning as if you are buying that wedding dress and planning for the entire marriage that comes after it. Just like in marriage,  the real return on your investment comes from years of hard work, communication and self-reflection.

So say yes to the dress or to your financial plan, but remember these rules to keep your head out of the clouds.

In part I of this three part series we found that moving from Vancouver, BC to Corvallis OR hasn’t saved that much money despite moving to the supposedly “low tax” USA.  I have $166.11 less a year having moved here.

In Part II, I will tackle the big ticket costs of housing, car insurance and medical insurance.

First up, housing. Corvallis is a lot more expensive than I had expected.  Before we arrived I did some research and the city website indicated that the average one bedroom apartment was $500/mon, which is a lot cheaper than Vancouver, BC one of the most expensive cities in the world.   Therefore, I thought our total cost of housing would be around $700/mon tops.

Well, was I wrong. Corvallis has rental vacancy rate of under 1% .  The explosive  growth of Oregon State University and lack of corresponding growth in the rental units means that it is actually really hard to find a place to live.  Don’t get me wrong, you can get places cheap.  We saw a ‘bachelor’ unit that was in the basement with uneven walls, no windows and a shower that was in a concrete hallway all for just $400/mon.  There was a small two bedroom for $600/mon but it smelled of mold which was a problem with many of the units I saw.  For a week from my operation centre at the Days Inn through the worst rain storm of the last decade I must have seen every unit available in January and February. We even went to Albany(gasp!).

We eventually settled on a brand new one bedroom unit at this new condo complex which had been converted to an apartment complex.  On top of the rent, renters in Corvallis are expected to pay for everything else… sewage, water and garbage, electricity and even liability insurance.  The breakdown is below.

In Vancouver, we lived in subsidized student housing that included everything .. electricity, wifi, and even cable.   So instead of using our rent, I asked around and I think $1100/mon should get you a one bedroom in reasonable conditions.  Of course renters are required to pay electricity and WIFI.  The breakdown is below:

Canada US
Monthly after taxes and deduction $3,167.19 $3,181.04
Rent $1100.00 $921.00
Sewage/Taxes/Garbage $37.00
Insurance $8.83
Electricity $50.00 $50.00
WIFI $50.00 $50.00
After housing $2,067.19 $2,114.20

So after housing costs, it’s only slightly ($47) cheaper to live in the US.

Next I looked at car insurance.  In British Columbia we have government mandated car insurance through an agency called ICBC.  Their insurance is not cheap.  I qualify for the highest possible discount and annually it costs approximately $1300/year.  In the US my insurance is $606 for the year. So after car insurance I have $1958.86/mon in Canada and $2063.70/mon in the US.  So the US is still cheaper to live in by about $104 a month or around $1258 a year.

But we haven’t talked about health insurance yet.  In Canada we have national health insurance, although in BC we do have pay a premium.  The premium rate depends on the number of members of your family and your income level.  We pay $109 per month in premiums.  This covers all primary and hospital care.  We also pay supplementary health care for dental coverage, prescriptions, massage etc, but I’m going to ignore that and concentrate on primary care. In the US  we have to contend with a private system.  If you have a good employer, your health care is mostly paid for as it is for my husband.  However, if you do not have your own employment coverage or are not covered by your spouse then you have to pay for yourself.  If I get the same coverage as my spouse, our cost will be $306/mon with an annual deductible of $200.  A deductible is the amount you have to pay up front each year and only once you exceed that does your coverage start to pay portions of your care.   I also received independent quotes for healthcare and they ranged from $150 – $250/mon and have deductible $1000 – $2500.  Given that I probably will only go to the doctor twice a year at a cost of $150 per visit I’m likely not to need to take advantage of my plan that much beyond the deductible. So let’s say I take my husband’s work coverage:

Canada US
Monthly after taxes, rent and car insurance $1958.86 $2063.70
MSP premium per month 109
Husband’s monthly health premium 6
My monthly Health Premium 306
Monthly after Health Insurance $1,849.86 $1,751.70

Living in US has all of sudden became more expensive.  I understand now why people would choose to not get insurance. Even if I take the cheapest premium option which leaves me with a deductible of $2500 per year ( which means unless I have a real emergency, I’m paying for my own health care costs) :

Canada US
 MSP premium per month  109
Husband’s monthly health premium  6
My monthly Health Premium 150
 After Cheaper Health Care $1,849.86 $1,907.70
With 2 doctor Visits ea  $400
Money left over for the year $22,198.32 $22,492.40

So US still works out cheaper to live by $294 a year. Next we’ll see if the lack of sales taxes in Oregon makes up for one of the highest state income taxes.

I been reading Carl Richards blog for a while now.  I don’t agree with everything he says, but “Your Misguided Search for a Money Guru” hit the nail on the head.

I agree with Mr Richards that while the need to find someone to help us make sense of the world is natural, we need to be aware that there are no such people as “money gurus.”  The foundation to good money management is a plan, some common sense and perhaps someone who can remind us of our plans and common sense when we need it.  That’s what I see my role as an advisor as.  I’m there to add a dose of common sense and maybe hold your hand to do what needs to be done, things that are hard to do like deny yourself current pleasures, or take the long view etc.

So how do you deal with it?  I always found it comforting to recite a modified serenity prayer:

I cannot control the future return of the stock market 

What I can control is how much money I save

What I have is the the wisdom to know the difference between what I can and can not control.

In the end all you can do is take a deep breath and do your best.  I know it is not as satisfying as me telling you to buy stock A and you’ll make tons of money but it’ll be a lot more truthful.

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